Voices: Jane Nowak, On Retirement Planning for Women

Women come into the investment arena at a disadvantage for a litany of reasons: They make lower wages than their male counterparts, take time off for family, and tend to put themselves last. Generally speaking, they don’t prioritize financial planning as highly as men. And because of their life expectancy, women need more money for retirement.

Unfortunately, 21% of women over the age of 65 live at or below the poverty line. In light of these factors, women often start far behind men as they prepare for retirement. And the result is that, on average, 21% of women over the age of 65 live at or below the poverty line.

As financial advisers, it’s our role to help fix this. We need to teach female clients the importance of the basics. I encourage women to save 10% of their take-home rate. That’s a large amount, but I think women will continue to be at a disadvantaged situation until they learn to save until it hurts.

We also need to encourage women to prioritize long-term planning. In general, women are really good with tactical planning and monthly budgeting. But when it comes to planning over a longer period of time, women are usually happy to defer to their husband or are too overwhelmed by caring for their family to be involved.

Women who are married should be included in every conversation about their household’s finances. Many women zone out during such discussions or allow their husbands to speak for them, assuming their husbands know what’s best for the future of the couple. You should help them understand that a woman’s needs might be different than her partner’s and that she needs to take the time to understand her own goals and how she envisions her future.

Women should definitely be involved in couples’ long-term retirement planning. When the man takes the lead, especially if he’s older, he may spend the money his spouse needs for her future. That’s a problem, because most women, statistically speaking, outlive their spouses. Women should therefore advocate for selecting the “joint pension with survivor option” for their working spouse’s pension. Although this will leave a couple with less money per month, the spouse will continue to receive partial payments throughout his or her lifetime if the employee passes away first.

Ultimately, advisers need to be patient and understand that female clients can take longer to make a decision about financial planning advice. Don’t lose interest in female clients just because they’re doing their due-diligence. Women are a growing demographic, and they are frequently in control of their household’s money. Planners should be prepared for the growing force of women.